The orexigenic hormone ghrelin is a 28-amino-acid peptide derived from a 99-amino-acid precursor and acylated at Ser-3, which was initially isolated from rat stomach. In addition to stimulating appetite and growth, it also plays various important roles in energy homeostasis and in the cardiovascular and immune systems. Although analysis of its physiological effects has yielded many significant results, much less information is available on its biosynthesis and the mechanism of its acylation. In this report, we have studied the endoproteolytic processing of this molecule from its precursor (proghrelin) into mature ghrelin in various prohormone convertase null mouse strains generated in our laboratory and have identified the convertase responsible for this event. Using Western blotting, mass spectrometry, and immunocytochemical methods, we have demonstrated that (a) in mouse stomach, prohormone convertase 1/3 (PC1/3) is the endoprotease responsible for the conversion of proghrelin to ghrelin, (b) the acylation of this peptide is processing-independent, and (c) the expression of proghrelin mRNA is increased in the processing-deficient (PC1/3 null) mouse.